Bruce Mackay & Ors v Ashwood Enterprises Ltd & Ors (2013)

Summary

The court had jurisdiction to make an order for costs on a without-notice application against the party who had not had notice of the hearing.

Facts

The appellants (D) appealed against two orders made in the course of proceedings brought against them by the respondent receivers (C).

D owned land subject to a legal charge in favour of a bank. The bank had appointed C under the Law of Property Act 1925 when it sought to enforce the charge. D denied that the appointment was valid. When C encountered serious difficulties in carrying out their functions, the bank applied for them to become court-appointed receivers. On June 29, 2013 the court made a receivership order and appointed C as joint receivers. It went on to make an order (the first order) upon C's without-notice application, declaring that D had no right to occupy the property or obstruct C's access to it. The order dealt with various other matters and provided that D should pay C's costs of the application to be summarily assessed. It concluded with the statement that any party to the application could apply to set aside or vary the order under CPR r.23.10. On July 5, the judge inserted into the order a more general liberty to apply than that afforded by r.23.10. On November 22, the same judge refused an application by D to set aside the costs order. He held that the liberty to apply did not give D a general ability to apply to vary or challenge the costs order, which had become final upon summary assessment, meaning that the proper route of challenge was an appeal. D appealed against both the costs order and the refusal to set it aside.

D submitted that (1) the court had no jurisdiction to make a final order for costs on a without-notice application, or, if it had, it could not properly exercise its discretion to do so against somebody who had not been given notice of the hearing; (2) the judge had erred in holding that the right to apply under the liberty to apply provision had been lost by delay; (3) it was wrong to make a costs order against them when they disputed the bank's right to appoint C under the 1925 Act.

Held

(1) The court had jurisdiction to make an order for costs on a without-notice application. Its power to make costs orders was conferred in general terms by the Senior Courts Act 1981 s.51, and the generality of that provision was at odds with D's contention as to the absence of jurisdiction in respect of without-notice applications. Furthermore, CPR r.44.10(2)(c) provided for a deemed order for costs to be made on a without-notice application, and that too was inconsistent with the proposition that no such order could be made. Finally, by virtue of r.23.10, the first order was subject to D's right to apply to have it set aside or varied. While it would rarely be appropriate for a judge to make an order for costs carrying a right to immediate payment on a without-notice application, it could be done (see paras 48-62 of judgment). (2) The judge had been right to hold that, even though there was no defined time limit on the liberty to apply, the court could take account of any unexplained delay by the affected party in making the application (paras 71-74). (3) The judge had been entitled to make the costs order, and he had been entitled to reject D's application to set it aside. There had been a significant, unexplained delay before D had made the application, and it had not been supported by evidence as to the merits of the dispute (paras 75-80). (4) (Obiter) Although C had not sought to argue that the costs order was not subject to the liberty to apply, either under r. 23.10 or under the general liberty inserted on July 5, the court would nevertheless comment. If the right to apply under r.23.10 applied to all aspects of an order made without notice to the party affected, there was no apparent reason why a general liberty to apply written into the order should not have the same wide scope. What lay beneath the judge's observation that the costs order was not subject to the general liberty to apply provision was his view that the right avenue of challenge was an appeal. That view was, however, incorrect. The assessment of the costs, if open to challenge at all, could only be challenged by way of an appeal. However, the party affected by the making of a costs order could apply to the court that made it to reconsider the merits at first instance, Bank of Scotland v Pereira [2011] EWCA Civ 241, [2011] 1 W.L.R. 2391 applied. The making of orders by way of substantive relief without notice to one party was exceptional. If such an order was made, the party affected should have the right to a first instance hearing at which it could present arguments that would have been relevant had the original hearing been on notice. In general, such a right was conferred by, and confined to, r.23.10. The court was not sure that it would recognise the existence of a free-standing right to apply, outside the scope of r.23.10 or any express provision made in the order (paras 63-70).